SEC moves towards finalisation of trading rules on digital assets 

Economy May 18, 2018 01:00


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AMID THE global boom in fund raising through initial coin offering (ICO), the Securities and Exchange Commission (SEC) has held a public hearing for drafted notifications and criteria under the emergency decree on digital asset businesses as a means to govern offering of digital tokens and digital asset businesses.

That will not obstruct interested and related persons on digital asset services with proper mechanism for investor protection.

The emergency decree on digital asset businesses came into force on May 14 with the SEC as the authority to regulate the issuance and offer of digital tokens to the general public, and digital asset businesses. The securities watchdog also has the power to set related criteria, procedures and conditions.

The SEC has distributed documents on a public hearing for proper regulations to allow those seeking benefits from digital assets to do so legally, as well as protecting investors from frauds, being taken advantages of, and prevent money laundering.

Based on the legal conditions, digital tokens will be offered after a filing of information and prospectus with the SEC’s approval. The offer must be made through ICO portal approved by the SEC.

The public hearing, which will end on May 30, will deal with issues ranging from criteria on approval for offer of digital tokens, qualifications of ICO portals and eligiblity criteria for investors in digital assets.

In regard to the criteria for approval of digital tokens, they will be offered by companies established under Thai laws. The SEC will take all information into consideration in order to thwart-fund raisers who are not following the regulatory criteria or wanting to take advantages of investors.

ICO portals which will screen digital tokens and their filings, will also be required to register as companies set up under Thai laws with a minimum registered capital of Bt5 million.

The directors and executives of fund-raisers and ICO portals' must be honest individuals. ICO portals must also have a system for due diligence, screening fund raisers and business plans, inspection of smart contract's source code, Know-Your-Client (KYC) process and suitability tests for retail investors.

Besides, the public hearing will ask for comments on the need for an approval system on additional fund mobilisation after the one-time approval, aside from the normal approval system for offering, as an alternative for fund raisers.

Retail investors who have been approved for digital token investment are allowed to invest no more than Bt300,000 each in each offer. The maximum value of each offer for retail investors will be scrutinised. 

The regulations on digital asset businesses will cover digital asset trade centres, digital asset brokers and digital asset dealers and all must gain Ministry of Finance's approval and meet SEC regulatory requirements.

These proposed regulations will consider sufficient funding sources, security system and risk management against robbery, KYC system and preventive measures for money-laundering.

 The digital asset business operators will be able to trade digital assets through cryptocurrencies determined by the SEC in the baht only.

SEC Secretary-General Rapee Sucharitakul said that notification on the public hearing on the digital currencies has been made to cope with the emergency decree on digital asset businesses and will accept comments from all sectors in order to reach a finalisation within three to four weeks.

An anonymous source from an ICO fund raiser said that after the launch of the criteria on the trading of digital currencies, the prices of digital coins have been dropping continuously in Thailand.

The source also expressed concerns over the emergency decree , saying that ICOs in Thailand will not grow, given the obstacles would discourage fund raising through ICOs in the country. 

After the emergency decree, several fund raisers through ICOs have mobilised fund abroad particularly in British Virgin Island which collects no tax on fund raising and coin traders, and allows coins to be traded by Thai investors.